Water/Sewerage Company

Eddie McGrady: To ask the Secretary of State for Northern Ireland what measures are in place to prevent financial disbenefits falling on customers should the planned Government-owned water and sewerage company not meet efficiency targets.

David Cairns: Water and sewerage tariffs will initially be set by the Department for Regional Development (DRD) for the period from 2007-08 to 2009-10. Shaun Woodward, the then Minister with responsibility for regional development announced in a written ministerial statement on 8 December 2005, which can be viewed in full by accessing http://www.publications.parliament.uk/pa/cm200506/cmhansrd/cm051208/wmsindx/51208-x.htm, that for the period to 2009-10 average household bills would be in line with England and Wales average household bills. Thereafter it will be the responsibility of the Economic Regulator to set tariffs in common with practice in Great Britain. Beyond 2010 therefore, the Regulator will set price limits based on demanding efficiency assumptions. The Company will be incentivised to keep its running costs and the costs of maintaining assets to a minimum and to use cost-effective solutions to achieve outputs.
	The company will be required to pay a dividend to DRD as its shareholder to reflect the cost of the taxpayer's investment in it. If a failure to meet an efficiency target reduces the company's ability to pay the dividend to DRD (either in whole or in part), the amount not paid must be covered in the first instance from DRD's budget and not by customers.